The government's dogged insistence that Saddam Hussein was able to deploy weapons of mass destruction within 45 minutes of the order being given suffered two serious blows yesterday as ministers braced themselves for the findings of the Hutton inquiry.

As the foreign secretary, Jack Straw, was once again forced to defend the justification for going to war, the Iraqi exile group in London which claims to have supplied MI6 with the intelligence about Saddam's 45-minute capability admitted that the information might have been completely untrue.

Nick Theros, the Washington representative of Iyad Allawi, who headed the Iraqi National Accord in exile, said it was raw intelligence from a single source, part of a large amount of information passed on by the INA to MI6.

He told the Guardian: "We were passing it on in good faith. It was for the intelligence services to verify it."

The admission came as David Kay, who resigned as the coalition's chief weapons inspector in Iraq on Friday, accused the intelligence agencies of failing to detect that Saddam's weapons programme was in disarray as a result of corruption and increasingly erratic leadership.

Mr Straw admitted that it was "disappointing" that the inspectors had not found evidence of the weapons, but said the war with Iraq was more justified today than it had been when MPs voted for the invasion.

"We were never saying that Saddam Hussein posed an imminent threat to the United Kingdom... The serious and current threat [was] to the world, and that was absolutely true, and I remain convinced it was," he told the BBC Radio 4 programme Today.

The claim that Saddam could deploy chemical or biological weapons within 45 minutes was highlighted by Tony Blair's preface to the dossier issued by the government in September 2002 in the run-up to the war.

It was also at the heart of the row between Downing Street and the BBC after doubt was cast on its accuracy by the government weapons scientist David Kelly.

But Mr Theros said the information now seemed to be a "crock of shit". "Clearly we have not found WMD," he said.

Mr Theros works with his father, a former US ambassador, to promote the political affairs of Mr Allawi, who is now a member of the Iraqi governing council in Baghdad.

He said the Iraqi officer who claims to have been the original source of the intelligence had in fact never seen inside the purported chemical weapons crates upon which his 45-minute claim was based.

The former INA spy, who calls himself Lieutenant Colonel al-Dabbagh, although this is not his full name, is now said to be "in hiding".

At the time, he says, he commanded a frontline unit.

He told the Sunday Telegraph and NBC television that before the September 2002 dossier was published he smuggled out sketchy intelligence about WMD to MI6 via a general in Baghdad working for the INA.

He said one of Saddam's senior officials told a meeting of air defence commanders "probably sometime in the spring" that an arsenal of unspecified secret weapons would be used for battlefield defence against US invaders.

"They told us that [coalition troops] cannot pass across Iraq because we will use everything from the knife to nuclear weapons to defend ourselves."

The colonel says his unit later took delivery of an unspecified number of crates which appeared to contain short-range weapons, such as rocket-propelled grenades.

They were supposedly to be fired from civilian jeeps as a last-ditch defence by Saddam loyalists wearing gas masks.

Sir Richard Dearlove, head of MI6, did not deny in evidence to the Hutton inquiry that the intelligence for the 45-minute WMD claim came second-hand from a single source who was a senior Iraqi army officer.

Further damage to Downing Street's case for going to war came from Dr Kay, who said yesterday that the CIA and other intelligence agencies had failed to recognise that Iraq had all but abandoned its efforts to produce large quantities of chemical or biological weapons after the first Gulf war.

He told the New York Times that his team discovered that Iraq had plunged into what he called a "vortex of corruption" around 1997 and 1998.

Iraqi scientists realised that they could go to Saddam and present plans for weapons programmes and receive large amounts of money, without making good their promises.